Most people have heard about the new bankruptcy laws. These new laws really changed a lot of things about filing bankruptcy. Making bankruptcy something that is more strict and less available. The whole idea of the new bankruptcy laws was to limit bankruptcy filings and help to protect both the creditor and debtor. Filing bankruptcy is not an easy solution nor is it something that a person should do just because they do not want to repay debts. With these amendments, the course of filing bankruptcy has significantly changed.
The new laws help to ensure people can not rush into filing bankruptcy. Now filing bankruptcy also includes getting educated which is aimed at helping to prevent filing again in the future. Moreover, eligibility in filing Chapter 7 bankruptcy has already been restricted to a set of income group. This is to prevent misuse of Chapter 7 Exemptions.
Thing to Consider About Filing
Filing bankruptcy is not the final solution of your financial woes. Your financial problems will still exist even after filing. The bankruptcy procedure can do is help you get debts under control. It will not solve your financial problems.
Advocacy is an inherent component of the new bankruptcy laws to ensure full understanding of the concept. With the counseling requirement, you will learn the right way on how to recover from your debts and how to avoid similar financial problems in the future.
Bankruptcy both affect you and your creditors In your case, your credit rating will suffer as a result of filing. Creditorsincur loses in dealing with debtor’s bankruptcy option. This is the reason why the new laws have limited access to filing of Chapter 7 bankruptcies which can erase debts and impose instead filing of Chapter 11 option which requires debt payment.
Income Limits
The new bankruptcy laws require a means test which will determine the income of the filer. If the income level is deemed high enough, a person will have to file Chapter 11 and repay debts. Lower income filers will still be able to file Chapter 7.
The means test weighs a variety of factors to determine if a person can afford to repay debts under a court sanctioned repayment process.
Counseling Requirements
The counseling requirements of the new bankruptcy laws are in place to help ensure that everyone filing bankruptcy understands the process and understands the importance of getting their personal finances under control.
The counseling sessions are required before filing and then again before the bankruptcy is finalized. Both the stages of filing and approval require counseling sessions. These are mandatory sessions regardless of the type of bankruptcy.
The new bankruptcy laws were put in place to stop abuse of the system and process. Creditors gain siginificantly from the lower number of Chapter 7 filings under these laws. Many people who go to file must file a Chapter 11 bankruptcy now under the new laws.
Filing bankruptcy should always be your last recourse if all possible ways to settle your debts have been exhausted. It is something that will go on your credit record for a while and can prevent you from obtaining credit in the future Additionally, you can run the risk of losing assets through the process that are seized to pay off debts. Overall, though, if you are in serious debt bankruptcy may be the key to getting your finances back under control.
If you need bankruptcy assistance, let us know.
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